THE FUTURE OF PROGRAMMATIC: BREAKING NEW GROUND — PART ONE

01/03/2018

Programmatic advertising, the most powerful form of advertising to come along since search, has, until recently, focused primarily on national campaigns. But now, the focus is shifting towards localized campaigns as advertisers seek ways to better reach users while getting the maximum efficiency out of their spend.

While it’s true that small and midsized businesses are jumping on the local programmatic bandwagon, they aren’t the only ones. National advertisers are also eager to expand their spend into highly targeted programs that take local preferences into consideration (e.g., think about Subway sandwich eaters wanting cheese steaks in Philadelphia and turkey with avocado in California).

The movement toward localized advertising is largely driven by the explosion of location-based data. As we wrote in a recent blog, whereas in the past, the gold standard data was search data, website data and behavioral data, now location-based data is enabling greater granularity in targeting. And advertisers are jumping onboard. In January of 2016 the percentage of mobile delivery on our platform was 36%. Mobile advertising spend now makes up over 75% of our total advertising impressions.

No doubt: Our industry is evolving at rapid-fire speed. So, what’s coming up next? You’ll start to see diverse media types being offered programmatically to take advantage of its inherent efficiency and scale benefits. And as inventory opens up in the evolving areas of programmatic TV, out-of-home, music streaming/internet radio and smart speakers, the potential of localized programmatic to reach people efficiently and effectively will continue to grow. We are currently working with our partners to access inventory as it becomes available in these up-and-coming spaces.

Programmatic OTT and Connected TV

It seems like the stuff of advertisers’ fantasies: apply the targeting capabilities of digital media to TV advertising. As content coalesces over-the-top (OTT) on connected TVs, in other words, as TV becomes increasingly digital, advertisers are looking to use these connected platforms in ever-advancing ways, turning this fantasy into reality.

The concept is similar to how programmatic display and video is currently bought for desktop and mobile. Programmatic OTT will enable marketers to more precisely reach connected TV viewers and effectively measure the impact.

Consumer viewing habits are changing; shifting away from traditional TV and this transition is fueling advertiser demand for new programmatic OTT and connected TV inventory. Case and point – currently there are already more than 56 million U.S. consumers who have cut the cord on traditional cable subscriptions (eMarketer) and that number is growing fast.

As we predicted in Simpli.fi’s 2018 Programmatic Advertising Predictions, the coming year will bring significantly more opportunities for OTT and CTV inventory to be bought and monetized programmatically. In other words, this area is hot, and we expect it will only continue to gain momentum.

BILLBOARDS, ELEVATORS, BUS STOPS, SUBWAYS, CARS

Out-of-Home (OOH) or outdoor advertising is projected to grow almost 12% in spend by 2020 – faster than any other traditional media, a trend that is attributable to opportunities in digital, reports the Outdoor Advertising Association of America. Digital OOH accounted for $2.7 billion in ad spend in the US last year. And this trend is only taking off. According to the Advertising Association/Warc Expenditure Report, Digital OOH accounted for 31% share of total OOH spending in 2015 and is expected to top 50% by 2020.

Relatively inexpensive LCD screens with built-in media players have opened opportunities for advertisers to place interactive video messages in point of purchase (POP) displays. Technology is also increasingly becoming available such as beacons that can interact with mobile devices to help media owners identify who is looking at these displays, what content is causing them to look, and how to best target the viewer with relevant local media. Think about the opportunities here to combine both proximity and context and then blow it up on a billboard or put it right in front of a consumer that is riding an elevator or in an Uber.

So, while programmatic may be relatively nascent for OOH advertising today, with the converging trends of local digital media, OOH, mobile and (to throw in another very relevant trend) geo-fencing, programmatic enablement of this market is set to explode. We predict programmatic will impact OOH just as it impacted digital advertising — as a total game changer.

Check back soon for the part two and read about the two remaining trends we see coming down the pipeline.